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Hamilton’s Curse- The Hamiltonian Revolution of 1913

This entry is part 4 of 9 in the series Hamilton's Curse

The American Revolution (incorrectly so-called, at least between 1775-83) didn’t end with the Treaty of Paris in 1783. Once the British were defeated the real American Revolution, the internal battle over the form of the American government would take, began. The real revolution was fought between conservatives (the deliberately mis-named “Anti-Federalists” whom we will refer to as the “true federalists”), who originally wanted to retain but amend the Articles of Confederation and a group of nationalists (whose press-savvy leadership adopted the misnomer “Federalists” who we refer to in this article by their true view- “nationalists”) who desperately wanted to eliminate the state governments as sovereign entities and tried to use the Constitutional Convention, unsuccessfully, to do it. Just to clarify- there were Federalists who were true federalists, mostly in the south. That’s why we use the term “nationalists” instead of “Federalists” to differentiate these two groups using the same party label.

Since the nationalists had failed to eliminate the state governments at the convention they devised a plan under the leadership of Alexander Hamilton to subjugate them by adopting a new constitutional hermeneutic clearly not supported by the text of the document. The hermeneutic they adopted said, in effect, whatever authority is not expressly forbidden to the federal government by the Constitution was permitted to it, including the powers reserved to the states and to the people alone. And the method they chose to impose this hermeneutic on the new federal government was to pack the judiciary branch with its adherents.

The battle to subjugate the states see-sawed for 126 years. From splits over a national bank and foreign policy during the Washington administration to Jefferson’s “revolution” of 1800 to the War of 1812, the Monroe Doctrine, Jackson’s “Tariff of Abominations,” the nullification and secession crises, battle over the Bank of the United States, the Missouri Compromise, the Mexican War, “Manifest Destiny,” the Kansas-Nebraska Act, “Bleeding Kansas,” the Dred Scott decision, the “Secret Six,” John Brown’s raid and state treason trial were all merely the warm-ups to the real showdown between nationalists and true federalists over the Constitution and its proper interpretation- the War Between The States. The military victory of the nationalist northern Union over the federalist southern Confederation seemed to answer the question of constitutional interpretation and the nature of the Union by force. But questions answered by force of arms are rarely actually settled.

Even after a victory by force of arms the nationalists realized that there still existed in the language of the Constitution elements of state sovereignty and stiff controls on the growth of size in the federal government in the form of the minting and value of money and restriction of direct taxation (like income taxes). Nationalists knew that those parts of the Constitution that covered these restrictions intact could not be pushed aside by nationalist judicial reinterpretation, something Thomas Jefferson warned against –

Our peculiar security is in the possession of a written Constitution. Let us not make it a blank paper by construction.

Nationalists knew this because even a Supreme court packed with their cronies simply could not create by construction an argument that made explicit prohibition of direct taxation impermissible. That was demonstrated when the Supreme court declared the first two federal income taxes unconstitutional in 1872 and 1896. They just couldn’t get the job done by simply declaring they had the power to pass a tax and attempting to justify it by manipulating the meaning of the clear words of the Constitution.

Nationalists also knew that they had to stop the 10th amendment to the Constitution from being used to stifle federal usurpation of state and local authority as had been done before 1861. The only way to accomplish this was to remove the state governments’ representation in the federal Congress. They had to strip the authority to choose Senators from the state governments and place that authority in the hands of a more easily manipulated body with a short memory and nationalize it as much as possible. They were creating a super-representative with a term length guaranteed to keep the average voter from remembering that a Senator was a profligate tax-and-spender for the first 41/2 years of his term, especially if he supported some showy but meaningless legislation that allowed him to claim that he had been a “true fiscal conservative” his whole term (sound familiar?) during the final 18 months of it.

Last but certainly not least, nationalists understood that their grip on power would be tenuous and their ability to manipulate the populace would be limited without complete control of money and credit. They needed a national bank with the ability to nationalize interest rates and a fiat money supply which could be inflated or deflated to help manipulate voters, especially around presidential election years.

DiLorenzo explains in this chapter how all of this was accomplished within the span of a single year- 1913. He also explains that this was not the result of recent “progressive” tinkering as some historians have claimed but the result of deliberate and concerted efforts by men dedicated to accumulating and centralizing power in a national government at the expense of state and local governments over more than a century.

He also explains that the movement has had several incarnations during that period. Hamilton and his followers were advocates for a high tariff to “protect infant American industry” and an American form of Mercantilism.

Later, Henry Clay modified Hamilton’s vision into his “American System” of corporate welfare for road and canal building (which bankrupted several states, including Lincoln’s Illinois) and other “vital” industries, a national bank to “create credit” for these schemes and centralization of power in Washington, especially the power to tax.

Lincoln, calling himself Clay’s political heir, then further modified and implemented Clay’s system by claiming that the federal government had the “right” to keep states from seceding from the union by force of arms, thus stripping the 10th amendment of any real meaning, and tacitly claiming that it was necessary for northern corporate welfare that southern tariffs continue to be collected. Since he no longer had southern revenues to pay for the war to coerce them back into the union, he forced a graduated income tax (including withholding) through Congress claiming that it was constitutional because it was an “indirect direct tax,” making a mockery of the constitutional prohibition against direct taxation without apportionment.

I have included some media to illustrate what is meant about how nationalists think about the Constitution. Especially illustrative of the ultra-nationalist “living document” theory of constitutional interpretation is this conversation between Judge Andrew Napolitano and Rep. James Clyburn (D-SC) on the constitutionality of the federal health care law. Napolitano is taking the strict constitutional constructionist position (and dropping the ball on federal intervention in education matters).

[youtube]http://www.youtube.com/watch?v=00Xcqp46A64[/youtube]

In this article, Republican party “big tent” proponent, self-titled “conservative” and  naturalized American citizen born in Canada, David Frum, completely fails to make the case that the health care law is somehow constitutional. He does, however, expose his position as a nationalist in the Hamilton-Webster-Lincoln tradition as described earlier by adhering to the arguments stemming from the constitutional position described for that group of thinkers.

By the late 19th century it became clear to nationalists that they still had one obstacle in their path; the Constitution. The language in certain sections of the constitution simply could not be adequately de-constructed by re-interpretation and changes HAD to be made.

Hence the concerted efforts by nationalists to get the 16th and 17th amendments passed. Unfortunately, there was such a complete lack of understanding among the citizenry of what money and its purpose and function were, let alone the constitutional restrictions connected with the coining of it and the regulation of its value, that there was very little protest when the Federal Reserve System, a privately owned and operated national banking system, was created by law in complete violation of the Constitution, in the same year that the 16th and 17th amendments were finally passed. Thus, the last vestiges of the original American Republic  disappeared in a single year. The Revolution of 1913 completed what was started in 1861-5. The conversion of the United States from a federated republic of autonomous states ruled by law under a Constitution which limited the powers of the federation government to a single government entity free from limitations of its power by decree of its own courts and driven by the “will of the people” as manipulated by government/media for the “common good.”

DiLorenzo explains how this all took place in the course of a few short months and what the devastating results have been in the years since.

Series NavigationHamilton’s Curse-Public Blessing or National Curse?Hamilton’s Curse- Hamilton’s Disciple: How John Marshall Subverted The ConstitutionHamilton’s Curse Chapter 8–Poisoned Fruits of “Hamilton’s Republic”

Posted in Biblical Worldview, Book Review, Commentary, Economics, Private Property, Public Policy Principles News, Public Policy Radar, Taxation.